Orix Corporation · TSE:8591
Orix — Q3 FY2022.3 Earnings Presentation
47 slides from Orix's earnings presentation, Feb 7, 2022
Slide 1: ORIX Corporation Third Quarter Consolidated Financial Results
ORIX Corporation Third Quarter Consolidated Financial Results For The Nine-Month Period Ended December 31, 2021 Hitomaro Yano Executive Officer Head of Treasury and Accounting Headquarters February 7, 2022 1 Company Name (TSE: 8591; NYSE: IX) Copyright © 2022 ORIX Corporation All rights reserved.
Slide 2: Executive Summary
Executive Summary (1) Net Income & ROE Q1-Q3 Net income of 211.3 JPY Bn (+48.8% YoY); annualized ROE of 9.1% Achieved 68.2% of 310 JPY Bn net income forecast* Q3 net income of 64.7 JPY Bn (up 34.2% YoY) Net income growth fueled primarily by overseas segments; ORIX USA and ORIX Europe post record pro
Slide 3: (1) Net Income & ROE
(1) Net Income & ROE ✓ Q1-Q3 211.3 JPY Bn in net income (+48.8% YoY, 68.2% of full-year forecast *1), annualized ROE of 9.1% ✓ 3Q net income of 64.7 JPY Bn down QoQ mainly due to losses at investees but up 34.2% YoY ✓ On track to post record full-year EPS of 257 JPY *1 Net Income *2 and ROE Quarterl
Slide 4: Breakdown of Q1-Q3 Segment Profits
Breakdown of Q1-Q3 Segment Profits 254.9 JPY Bn, up by 34.4% YoY (+65.3 JPY Bn) 22.3 Q1-Q3 Base Profits Segment profits rose on expansion in asset management businesses in Europe and US. Corporate Segment profits Financial Services and Maintenance Leasing, Asia and Australia, Real Estate also solid
Slide 5: Segment Profits
Segment Profits ✓ Vs. 21.3 Q1-Q3: Six segments recorded growth (mainly in Europe, US, Asia), profits up sharply overall (+108.4 JPY Bn) ✓ Vs. 20.3 Q1-Q3: Seven segments with minor COVID impact posted substantial growth, three segments with major COVID impact have potential for strong recovery post-p
Slide 6: Segment Assets
Segment Assets ✓ Assets increased on continued new investment, project development ✓ Annualized segment asset ROA improved to 2.4%, up 0.7% points vs. end-FY21.3 (JPY Bn) 22.3 3Q Vs. end-21.3 ROA* Highlight Corporate Financial Services Segment Assets 1 1,637.0 -39.0 3.9% Strategically reduced lendin
Slide 7: (2) Capital Recycling
(2) Capital Recycling ✓ 1 JPY Tn pipeline centered on renewable energy business, PE investments ✓ Asset sales with focus on achieving best price, increasing ROE while recycling capital 1 JPY Tn investment pipeline Well-timed asset sales Environment & energy 200 JPY Bn FY22.3 Q3 Investments in renewa
Slide 8: (3) Credit Ratings
(3) Credit Ratings ✓ Credit ratings upgraded by four of five agencies, validation of ORIX’s stable business base and steady earnings despite COVID impact ✓ Since global financial crisis, have achieved ROE growth while controlling D/E ratio Credit ratings D/E Ratio*5 & ROE*6 End-Mar 2021 End-Jan 2022
Slide 9: (4) Shareholder Returns
(4) Shareholder Returns ✓ Revised DPS forecast upward following Yayoi sale (from 78 JPY per share to 78 JPY per share or 33% dividend payout ratio, whichever is higher) ✓ Assuming net income exceeds 285 JPY Bn, DPS will be above 78 JPY – a record high Revised DPS forecast (FY22.3) DPS Trends (From F
Slide 10: Segment Performance
Segment Performance Copyright © 2022 ORIX Corporation All rights reserved. 10
Slide 11: Corporate Financial Services and Maintenance Leasing
Corporate Financial Services and Maintenance Leasing Segment Profits: 71.1 JPY Bn YoY +20.6 JPY Bn (+41％) Segment Assets: 1,637.0 JPY Bn YTD -39.0 JPY Bn (-2%) ✓ Corporate Financial Services recorded both investment gain and valuation ✓ Price competition in low-interest rate environment has led to m
Slide 12: Corporate Financial Services and Maintenance Leasing - About the Business
Corporate Financial Services and Maintenance Leasing - About the Business Main business: Finance and fee business; leasing and rental of automobiles, electronic measuring instruments and ICT-related equipment Corporate Financial Services Auto Rentec Rental and specialized services for Leasing, finan
Slide 13: Real Estate
Real Estate Segment Profits: 27.9JPY Bn YoY +11.3 JPY Bn (+68%) Segment Assets: 888.1 JPY Bn YTD +16.0 JPY Bn (+2%) ✓ Profits up sharply on development, sale of logistics facilities ✓ Assets up as ongoing new development outpaced sales of logistics ✓ Facilities operations losses shrank as occupancy
Slide 14: Real Estate – About the Business
Real Estate – About the Business Main Business: Real estate development, rental and management; facilities operation; real estate asset management Segment Assets Unrealized gains on rental Segment Asset Trends （as of end-Mar, 2021） properties* Primarily DAIKYO Primarily leased condominiums logistics
Slide 15: PE Investment and Concession
PE Investment and Concession Segment Profits: -10.2 JPY Bn YoY -14.8 JPY Bn (-324%) Segment Assets: 356.9 JPY Bn YTD -21.8 JPY Bn (-6%) ✓ Profits lower on impairments related to sale of Kobayashi Kako assets ✓ Segment assets lower owing to Kobayashi Kako-related impairments, ✓ PE investees other tha
Slide 16: PE Investment and Concession – About the Business
PE Investment and Concession – About the Business ✓ Currently invested in 17 companies (as of end-Dec 2021); aim to develop new business segments for ORIX Investment Track Record What makes us unique? Leveraging our broad network and ORIX has not only sufficient funding ability but also possesses si
Slide 17: Environment and Energy
Environment and Energy Segment Profits: 18.4 JPY Bn YoY +1.4 JPY Bn (+8％) Segment Assets: 697.0 JPY Bn YTD +207.8 JPY Bn (+42%) ✓ Greenko began contributing to earnings from Q2, Elawan from Q3 ✓ Assets higher with completed Elawan acquisition ✓ Profit growth also supported by investment gain from sa
Slide 18: Global Renewable Energy Portfolio
Global Renewable Energy Portfolio ✓ Total net owned operating capacity of 3 GW* worldwide （as of end-December, 2021） ✓ Around 2 GW of projects under construction, primarily at Elawan, Greenko Pipeline assets include Greenko (more than 8 GW), Elawan (more than 9 GW) Spain & other locations China Japa
Slide 19: Insurance
Insurance Segment Profits: 45.7 JPY Bn YoY -5.9 JPY Bn (-11%) Segment Assets: 2,073.5 JPY Bn YTD +114.0 JPY Bn (+6%) ✓ ORIX Life: Profits up on growth in insurance policies ✓ Assets up on increase in insurance policies ✓ Segment profits lower YoY on absence of FY21.3 Q1 reversal of liability reserve
Slide 20: Life Insurance – About the Business
Life Insurance – About the Business ✓ Omni-channel strategy (including Internet/mail order) has allowed ORIX Life to post growth in polcies well above industry average ✓ Shift from mix dominated by third-sector products (such as medical insurance CURE) to a more well-balanced portfolio with introduc
Slide 21: Banking and Credit
Banking and Credit Segment Profits: 34.4 JPY Bn YoY -4.0 JPY Bn (-10%) Segment Assets: 2,698.2 JPY Bn YTD +7.6 JPY Bn (flat) ✓ Banking: Profits higher on increase in financing revenues from real ✓ Assets mostly flat estate investment loans ✓ Credit: Profits lower on absence of year-earlier reversals
Slide 22: Banking – About the Business
Banking – About the Business ✓ ORIX Bank’s real estate investment loan-focused service menu helps it realize a high ROE, ROA compared to peers ✓ Low-cost business model with no branches, ATMs, or settlement services delivers a low expense ratio and a high loan-to-deposit ratio FY21.3 Expense Ratio*1
Slide 23: Aircraft and Ships
Aircraft and Ships Segment Profits: 3.2 JPY Bn YoY -1.1 JPY Bn (-26%) Segment Assets: 645.9 JPY Bn YTD +44.1 JPY Bn (+7%) ✓ Ships business profits up sharply on strong marine shipping market, asset ✓ Ships: Assets increased with new loan execution sales and loan executions ✓ Aircraft: Assets down ow
Slide 24: Aircraft and Ships – About the Business
Aircraft and Ships – About the Business GLOBALLY NARROWBODY OEM DIVERSE WEIGHTING BREAKDOWN Owned Committed （NBV） （number of aircraft） （number of aircraft） fleet fleet ORIX Aviation 66 0 ✓ Fully-owned subsidiary 14% 17% Average age ✓ Mainly trading in second-hand 36% 6.4 years market 42% ✓ Arrangeme
Slide 25: ORIX USA
ORIX USA Segment Profits : 68.2 JPY Bn YoY +43.1 JPY Bn (+172%) Segment Assets : 1,336.9 JPY Bn YTD +116.8 JPY Bn (+10%) ✓ By end-Q3, segment profits already surpassed prior full-year record, fueled by robust PE ✓ Assets higher owing to acquisition of assets held for sale in asset exits management b
Slide 26: ORIX USA – About the Business
ORIX USA – About the Business ✓ Focused on serving middle market clients across three verticals: Credit, Real Estate, Private Equity Aim to achieve further growth in asset management business in all three verticals (total AUM / AUA $74 Bn) ✓ Operates hybrid strategy, investing own principal capital
Slide 27: ORIX Europe
ORIX Europe Segment Profits: 56.2 JPY Bn YoY +29.1 JPY Bn (+107%) Segment Assets: 405.1 JPY Bn YTD +35.5 JPY Bn (+10%) ✓ AUM hit new record level, buoyed by strong markets ✓ Assets up on increase in investment in securities ✓ Contributions from performance fees helped ORIX Europe profits surpass pre
Slide 28: ORIX Europe – About the Business
ORIX Europe – About the Business ✓ Segment business: Equities, fixed income, renewable energy and other fund management ✓ Actively promoting ESG investment, especially through Robeco and Gravis Capital Management An ESG pioneer since the mid-1990s, Robeco is Major Subsidiaries Head Office Primary Bu
Slide 29: ORIX Group – Asset Management Business
ORIX Group – Asset Management Business ✓ Expansion in asset management business centered on Europe, US supports base profit growth ✓ Focus on management of diversified asset base, in addition to equities, fixed income, and alternative assets (Top manager of renewable energy, aircraft, condominium as
Slide 30: Asia and Australia
Asia and Australia Segment Profits : 35.9 JPY Bn YoY +28.7 JPY Bn（+396%） Segment Assets : 1,213.4 JPY Bn YTD +129.1 JPY Bn（12%） ✓ Profits up sharply on increase in finance revenues in South Korea, China ✓ Assets rose substantially on growth in new leasing business in South Korea and China ✓ Continue
Slide 31: Asia and Australia – About the Business
Asia and Australia – About the Business Segment Business: Finance and investment businesses in Asia and Australia Segment Assets NET Segment Revenue* Yields on Financial Assets (as of Mar 31, 2021) （FY 21.3） (JPY Bn) 7.2% 4% 650.0 7.5% 7.0% 7.1% 7.1% Other 6.9% 600.0 7.0% 16% 18% 31% 6.5% Other 550.
Slide 32: Appendix
Appendix Copyright © 2022 ORIX Corporation All rights reserved. 32
Slide 33: About ORIX: Proven Track Record of Profitability
About ORIX Proven Track Record of Profitability ✓ ORIX has achieved 56 years of sustained, profitable growth JPY Bn Net Income Attributable to ORIX Corporation Shareholders 350 300 250 FY2002.3 FY2009.3 Burst of IT bubble Global financial crisis 200 FY1998.3 150 Asian currency crisis FY1993.3 Burst
Slide 34: About ORIX: Expertise in Business and Collective Capabilities
About ORIX Expertise in Business and Collective Capabilities of the Group ✓ ORIX will continue to enhance our expertise in finance and tangible assets as we synergistically expand our businesses Copyright © 2022 ORIX Corporation All rights reserved. 34
Slide 35: About ORIX: Global Network
About ORIX Global Network ✓ Using its expertise cultivated in Japan, ORIX has expanded its business globally, with operations in 28 countries and regions worldwide Copyright © 2022 ORIX Corporation All rights reserved. 35
Slide 36: Outlook Beyond FY22.3
Outlook Beyond FY22.3 Announced at Results Briefing in May 2021 ✓ Forecast FY22.3 net income of 250.0 JPY Bn Aim to quickly return to net income of 300.0 JPY Bn and achieve 400.0 JPY Bn in medium to long term ✓ ROE: Returning to ROE of 11% or higher is management’s top priority (JPY Bn) Net income:
Slide 37: Three Portfolio Categories
Three Portfolio Categories (Breakdown of Financing, Asset Management and Insurance, Operation and Investment Categories on P36) Three Categories Three Category and Segment Matrix Asset management & Financing Operation & Investments Insurance Corporate Financial Services and Auto, rental equipment, C
Slide 38: COVID Impact on Segment Profits
COVID Impact on Segment Profits Segment Profits at Segments with Major COVID Impact and Segment Profit Breakdown of Segments with Major COVID Other Segments Impact （JPY Bn） Other segments Segments with major COVID impact (JPY Bn) FY20.3 FY21.3 FY22.3 Vs. FY20.3 Vs. FY21.3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-
Slide 39: Breakdown of Investment Gains
Breakdown of Investment Gains ✓ Stable investment gains realized across a variety of businesses Investment Gains* Major Business Sales (JPY Bn) Business FY18.3 FY19.3 FY20.3 FY21.3 No. Company Timing of sale ORIX Electric Power ① FY18.3 Real Estate 47.2 ② 58.2 ③ 54.7 18.4 Corporation PE Investment a
Slide 40: Funding Structure / Employed Capital Ratio
Funding Structure / Employed Capital Ratio ✓ Diversified funding methods and maintained a high ratio of long-term debt Funding Structure and Trends in Long-term Debt Ratio* Shareholders’ Equity / Employed Capital Ratio *Excluding deposits (JPY Tn) (JPY Bn) 3,000.0 100% 93% 2,500.0 88% 88% 85% 85% 2,
Slide 41: Financials: Funding Structure
Financials Funding Structure ✓ Diversified funding. Controlled costs while maintaining a high long-term debt ratio Breakdown of Funding Trend in Funding Costs and Long-term Debt Ratio* *Excluding deposits As of end-Dec 2021 Copyright © 2022 ORIX Corporation All rights reserved. 41
Slide 42: Shareholder Returns
Shareholder Returns Dividend Per Share and Payout Ratio Share Buybacks and Total Return Ratio 160 78% (JPY) 74% 100 55% 140 (JPY Bn) 50% 50.0 54.3 64% 90 50% 120 45.7 80 45% 39.1 54% 70 40% 100 47% 49% * 32% 33% 40% 44% 30% 60 35% 80 27% 10.9 25% 50 30% 29% 30% 23% 85 * 34% 60 20% 76 76 78 40 25% 66
Slide 43: ESG-related Key Goals
ESG-related Key Goals (from November 2021 Results Presentation) ✓ ORIX Group has established the following ESG-related key goals 1. Outside directors to account for over half of the composition of the ORIX Group Board of Directors by the General Meeting of Shareholders set to be held in June 2023. 2
Slide 44: GHG (CO2) Reduction Targets
GHG (CO2) Reduction Targets (from November 2021 Results Presentation) Measures to Reduce CO2 Emissions Key Goal #4 Key Goal #5 1.266 million tons 1. Increase woodchip mix to maximum of 40% at Soma and Hibikinada Coal and Biomass Power Plants 50% 2. Promote conversion to next-generation fuel reductio
Slide 45: GHG (CO2) Avoided Emissions through Renewable Energy
GHG (CO2) Avoided Emissions through Renewable Energy (from November 2021 Results Presentation) ✓ ORIX Group contributes to avoided emissions, primarily through its renewable energy business ✓ GHG avoided emissions total more than 3.6 million tons, far exceeding actual emissions ORIX Group GHG (CO2)
Slide 46: Disclaimer
Disclaimer ◼ These materials have been prepared by ORIX Corporation (“ORIX” or the “Company”) solely for your information and are subject to change without notice. The information contained in these materials has not been independently verified and its accuracy is not guaranteed. No representations,
Slide 47: ORIX Corporation
For the current IR materials and archives of past financial data, please access our website. IR Section https://www.orix.co.jp/grp/en/ir/ IR Library https://www.orix.co.jp/grp/en/ir/library/ ORIX Corporation Investor Relations and Sustainability Department Tel: +81-3-3435-3121 47 Company Name Copyri